Business rates killing Britain's high street and are not 'fit for purpose' say MP's

Business rates are ‘not fit for purpose’ an influential parliamentary committee said yesterday joining a chorus of MPs and business leaders two weeks ahead of the Budget.

In a hard-hitting report, the Business, Innovation and Skills Committee said business rates were the ‘single biggest threat to the survival of retail businesses on the High Street’.

Some of Britain’s biggest chains have collapsed into administration, ripping the heart out of town centres, with some critics claiming the tax has distorted the market place.

Reform: MPs called for a wholesale review of business rates which they said were killing off Britain's high street retailers

The levy on occupation of non-domestic property penalises retailers who invest in bricks and mortar stores, putting them at a disadvantage to those who sell solely online, who can use the saving to cut their prices.

The Business Committee called for a ‘wholesale review’ of business rates in a bid to help retailers and boost local economies.

The MPs said there should be an examination of whether retail taxes should be based on sales rather than the rateable value of a property.

They also suggested that retail needed its own system of business taxation, adding that a six month amnesty would encourage new businesses to the high street.

Concerns were raised that money allocated to a number of towns following a review headed by retail expert Mary Portas was not being spent.

Around £2.3 million was earmarked for so-called Portas Pilots, but committee chairman Adrian Bailey (Labour, West Bromwich East) said the Government could not provide evidence of how, or even whether, the money has been spent.

The Portas report, completed over two years ago, had stressed the need for a review of business rates, the MPs noted.

SMALL BUSINESS DEALS

Committee chairman Adrian Bailey said: ‘A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world.

‘Retail taxes should be based on sales rather than the rateable value of a property.’The committee called for a six-month business rates amnesty for companies that occupy empty properties.

That goes further than the 50 per cent reduction announced in the Autumn Statement and would encourage new businesses to the High Street.

Mr Bailey added: ‘British retail is a global success story, but its traditional home – the High Street – is struggling under a system of business rates that comprises one of the highest forms of local property tax in the European Union.’

The Business Committee called for a ‘wholesale review’ of business rates in a bid to help retailers and boost local economies.

British Retail Confederation director general Helen Dickinson said: ‘This report must be the final nail in the coffin of the question: do business rates need to be reformed? They do. Business thinks so. A committee of Parliament thinks so. We very much hope the Government will think so too.’

A Government spokesman said: ‘The Government's long-term economic plan is working, delivering economic security to hard-working people. A key part of this plan is supporting business which is why we have taken a series of steps to help local firms and shops with their business rates including announcing over £1billion of business rates support at Autumn Statement 2013.

‘Half of this will go to supporting the retail sector through a £1,000 business rates discount for shops, pubs and restaurants and a temporary reoccupation relief to help bring empty shops back into use.

'We are also undertaking a review of business rates administration which will look at longer-term reforms to make the system more transparent, efficient and responsive to economic circumstances.

‘Having benefited from multi-million pound Government support the 27 Portas Pilots and over 330 Town Teams continue doing great work promoting town centre innovation and community collaboration.’

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Business rates killing Britain's high street and are not 'fit for purpose' say MP's